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As more post judgment rulings approach in Vringo's (VRNG) case against Google (GOOG), VRNG watchers are trying to determine which events will carry the most weight. Following are the specific events which will shape the course of the litigation from here. Given that the upcoming rulings are likely to favor Vringo, I consider the stock to be a strong buy at this level.

Judgement as a Matter Of Law (JMOL) rulings are among the next to be decided. You can view those motions here, here and here. My position on these motions is one of common sense, but patent litigation attorneys have provided insight into JMOLs after a jury verdict as well. For Judge Jackson (JJ) to hand Google a victory on any of these motions would mean that he is convinced by a new argument not considered when he rejected these same legal challenges at earlier stages in the process. Final briefs from Google are due shortly.

What would make ruling in favor of Google significant is that JJ would have to find that a reasonable jury would not have ruled as this jury did in his courtroom on November 6th, 2012. I'd say that is a bridge too far, but this Judge has surprised me on more than one occasion. By contrast, a ruling against these motions would mean that the Fat Lady has jumped out of her seat and has grabbed the mic. For those wondering what would happen to the underlying stock price, I believe we would see a nice spike on rulings against Google here.

A One-Day Trial on past damages is an intriguing and much discussed topic among investors. Most people have focused on the fact that both Vringo and Google have questioned the past damages and therefore it seems logical that JJ will order a new trial. I am calling it a one-day trial but depending on its scope, it may take longer. One reason for JJ to order this trial is that he can leave it to a new jury to iron out the calculations that posed problems for the prior jury (largely due to the last minute laches ruling which then caused the damages calculations offered by Vringo to be adjusted by the jury without clear guidance from the court on how that adjustment should be made) rather than stepping into the breech himself. If he were simply to make a change on the past damages given his interpretation of the events in his courtroom, he would be trying to guess what the prior jury was doing and his ruling would then be the focus of any appeals. By seating a new jury he gives both sides the opportunity to reiterate the arguments and he gives a new jury the chance to do the math and to "show their work" perhaps even by demonstrating a calculation with and without the results of the laches ruling. Since the trial would likely be narrowly focused, JJ could also allow a "from September 15, 2011 forward" damages chart to be introduced to the jury (if for no other reason than he doesn't want the same result all over again) to avoid shouldering blame for the way it was handled previously.

There is quicksand ahead for both litigants if JJ allows the parties to cover too much new ground however. For example, Google might want to flesh out its argument for a 2.8% apportionment. On one level this may seem an advantage to them and could be, but keep in mind that if the Judge gives both parties room to make new arguments, Dr. Becker could then come forward with a 40% apportionment opinion as well. The same applies to the running royalty percentage. Google must be careful here as Vringo can make a logical case for 7% if the jury gets to hear new arguments. On balance, I see the one-day trial being far more favorable to Vringo than Google. For Vringo it's hard to fall off the floor. For Google the way this sits right now given that they actually lost is quite favorable.

The 792 motion on interest and supplemental damages was filed just days after the verdict and has been fully briefed, so theoretically it could be ruled on right now. In the event that JJ orders a one-day trial on damages however, it is likely going to have to wait since the supplemental damages should be based on the same formula as the past damages and only cover from October 1, 2012 until the verdict. Since JJ has shown that he will rule when investors seem not to be expecting it, a quick judgment on this is possible. If he does rule, it may well be a sign that he is not going to order a new trial on damages.

If there is no new trial on damages it means one of two things. JJ could accept as gospel a past damages number that both sides say is in error under the notion that the jury must have known what it was doing when it granted Vringo damages from Google, which were grossly disproportionate to the damages it assessed the other co-defendants based on the relative dollar amount of the infringements. Alternatively JJ may in fact use his authority to change the past damages number citing a manifest error in transposition. Should this happen, Vringo investors could again count on significant positive movement in the stock, likely to a new high. I think JJ is more prone to order the one-day trial.

Since no one is really here for the pre and post judgment interest or the recovery of court costs (though we'll take 'em), let's talk about some other mitigating factors in the case.

Appeals are quite possible since Vringo is not likely to let the laches decision go and a reversal there would be a huge windfall. At the same time Google will appeal the infringement and validity portions of the verdict and eventually the final damages. The odd thing about the appeals process in this case is that although Vringo was the nominal winner at the conclusion of the trial, as far as the outcome thus far, Google has come out looking like the winner. Google has won the laches motion (without even having to make it), infringed Vringo's patents; and reaped billions in revenues at a cost of only $15 million so far. If the past damages award is not changed, the supplemental damages may be likewise insignificant if arrived at by applying the same calculus. Life as a loser is looking very good for Google!

Even though it could have happened before and I thought it would, it seems like a settlement might be in Google's best interest while it still has a modicum of leverage. If Google thinks its luck will hold, I think it will not bother with settlement and I imagine that Vringo's settlement price may be too high given how little economic damage Vringo has been able to inflict so far. But Google is surely thinking about how this case could turn ugly if its luck does not hold. It knows that appealing has the very real prospect of exposing them to a much bigger judgment if the laches decision gets overturned (not my expectation) or if the past damages calculations get revised and $140 million of damages is "found" by Vringo either on appeal or by the new jury (far more likely).

The Running Royalty (RR) percentage to be applied is also open and will be addressed after these initial rulings, which should come anytime after next Tuesday. It is hard to handicap what the Judge will do. Many have commented that this number could be increased as Vringo has argued. The swing on the RR alone could be a billion dollars. So as an interested observer I would think that once JJ rules on the JMOL motions, providing they go against Google as I expect, the impetus for Google to settle becomes much greater.

A United States Patent & Trade Office (USPTO) opinion on the validity of the 420 Patent is unlikely for at least several months if not for up to a year. This would be sort of the final escape hatch for Google after the JMOL rulings and I fully expect this will be the next "sky is falling" target for Vringo shorts to emphasize mainly because that and a phantom "work around" are all they have left. If the USPTO upholds the 420 patent (which I expect it will) this is over. If not, then Google has to hope that the USPTO invalidates the 664, or it remains on the hook for damages. Interestingly, the examiners have determined to look at the 664 only in view of the Rose patent (all other references have been dismissed as intervening by the USPTO) and only from the perspective of "anticipation." The bar for anticipation is very high. It asks that all aspects of a claim be deemed anticipated by this single prior patent.

I encourage people to review the Rose and Lang patents and see if they think we are talking about the same invention. I do not see the claims as having any significant overlap. The reason the USPTO agreed to the re-exam seems more a matter of the fact that the 664 did not cite Rose as prior art than anything else. And why was that? It is probable that Rose was not cited as prior art because it does not describe Lang aptly enough for it to be considered prior art. I anticipate that many of the responses made in Vringo's USPTO response to the 420 re-exam will be used in its 664 response and I encourage investors to read it. A reasonable USPTO examiner will find that the patents are not similar, but long after Google will need to decide if it wants to keep hoping that JJ and a new jury (for the one-day trial) will continue to punish them by stoning them with marshmallows.

An excellent read on the USPTO process is Georgi Dimitrov's article responding to Dan Ravicher's assessment of how the USPTO is likely to rule in its final office actions (which Dan has since updated with respect to the 664). As Georgi's article points out, only the best patents actually survive the gauntlet to make it to trial. Those are not typically the ones the USPTO invalidates.

The glaring difference in the two patents is that Lang ranks and filters information in response to a query and Rose utilizes stored profiles and data points to determine relevance. This is a fundamental difference so significant it is not likely to be missed. It is so difficult to see a Google path to invalidating the 664 Patent (mainly because the USPTO has dismissed so many references sought by Google) that Vringo may want to consider trying to expedite a finding on this patent. A jury verdict and the USPTO upholding the 664 Patent basically means that the road for any future litigant fighting the 664 is steep and this would speed the process of future resolution.

A Valuation of Vringo as one of straight stock for cash based on the Google litigation alone is simplistic and in my view erroneous. The telecom portfolio Vringo has could well be worth more than the Lang patents (which expire in four years) when all is said and done. Between Microsoft (MSFT) and ZTE (OTCPK:ZTCOF) how should one handicap? A case may be made for several hundred million in past damages (and half that going forward in RR until 2016) from Microsoft given the constructive notice dates that Vringo cites in their complaint as well as the advent of Microsoft search operations. So given the current share structure, Microsoft alone could be worth $3/share. ZTE with annual revenues of some $15b is also significant. Vringo has sued ZTE in both the U.K. and Germany for infringing its telecom patents. In Germany the court in Mannheim is expected to rule on Vringo's request to enjoin all of ZTE's infringing products. It is an open question what this litigation could be worth but an injunction would almost certainly force a substantial settlement.

In conclusion and as of this writing, the stock price of Vringo hovers around $3.20. Since I expect a near term bump from JJ's JMOL rulings and another bump if he orders a one-day trial, I recommend either adding to your current position or opening a new one. If the outcome from a one-day trial were to yield the result many expected before the verdict was read last November, we would see a much more significant spike still. In that event it would be hard to see anything lower than a 3.5% running royalty rate ordered by Judge Jackson and given similar patent case outcomes there is nothing to rule out 5% to 7%.

One very interesting comment from Princetonatty44 in response to yesterday's SA article from Enhydris PE mentions that Vringo could look to add significant additional value by acquiring under funded companies with potential goldmine patents. Specifically he cites Worlds Inc. (OTCQB:WDDD) which I first alerted investors to on January 4th of this year. Worlds is suing Activision Blizzard (ATVI) for infringing on its technology in the wildly popular (and profitable) World of Warcraft and Call of Duty game franchises. The patented technology allows thousands of players to operate at one time in a 3-D virtual world. Activison and other Massively Multiple Online Role Playing Game (MMORPG) makers all use similar technology (very similar to how most if not all in "search" use Lang's technology) so at .21/share and a Markman Hearing in June of this year, it is not hard to conceive Worlds approaching $1 in the next several months. Should Vringo decide to acquire a company with a Worlds type profile, that company would shoot the moon overnight. By way of disclosure my group has a significant position in Worlds Inc. which we intend to hold through the Markman Hearing.

Source: Vringo: Get Ready To Rumble